Why is my blended tax rate so high at 70.9% on a taxable income of $1,270?

[Anita01]

You can look at Schedule 4 of your 1040 to see what taxes are on your return.  The tax rate is simply the result of all the different types of tax on your return, it's not what's causing the tax.

Click on Tax Tools on the left, then Tools.  Choose to View your tax Summary, then Preview your 1040.

[thanhtamlee11]

I have the same issue. 

My Taxable income is $2,126.

Blended Tax Rate is x 225.00%

Tax Liability is $4,784.

I can not figure out why it is so high. 

I follow the instruction and can not find Schedule 4 on Turbotax/ Tool/Preview 1040.

Can anyone explain? 

Thanks a lot!

[VolvoGirl]

First of all.....

This is a new forum layout. Some posts that have June 2019 dates are really older posts from the old forum that got moved over. So they might be for prior years and not current info. When they migrated over the dates got changed to June 2019. And the screen shots got deleted. 

There is no schedules 4 - 6 for 2019.  Only new schedules 1-3.  And the 1040 has more lines on it now from 2018.

Did you get a 1099Misc for something?

Or a 1099R?  You might owe the 10% Early Withdrawal Penalty.

[thanhtamlee11]

Thanks so much for your reply!

I got 1099-Misc.

And I did not withdraw anything early. Turbotax confirms that I have no penalty. 

The Blended Tax Rate is really a puzzle to me. 

According to my understanding, we have Tax Bracket for different amount of income. However, the highest tax bracket is way far below that 225%. 

Do you think Turbotax made a mistake in the calculation? 

[VolvoGirl]

A 1099Misc is usually for self employment income.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.

The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15. The SE tax is in addition to your regular income tax on the net profit. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a. Turbo Tax automatically calculates the SE Tax and Adjustment.

For 2019 Schedule C Net Profit or Loss now goes to 1040 Schedule 1 line 3. Then the total on schedule 1 line 9 goes to 1040 line 7a.

[thanhtamlee11]

Hi there,

I really appreciate your reply in details. 

Even though I don't understand everything you said. I am really grateful for your time and knowledge!!!:)

I wish I can change anything on Turbotax to get a reasonable tax rate for my net income. 

It is really hard to pay more than $4000 for that low income. 

Sad!

Thanks!